Greek unions to protest PM speech

About 4,000 police readied in northern city for the latest in a series of rallies against government spending cuts.

Papandreou is due to give a key speech on the economy in Thessaloniki later on Saturday [AFP]

Unions in Greece are set to hold the latest in a series of rallies against government spending cuts ahead of a speech on the economy by George Papandreou, the prime minister.

About 4,000 police were being deployed on Saturay to patrol in the northern city of Thessaloniki on Saturday, where Papandreou was due to speak later in the day.

Greece narrowly avoided going bankrupt in May, when it took a loan worth over $100bn from European countries and the International Monetary Fund.

The country's main trade union will lead the protest in the late afternoon. It accuses the government of seeking to "overthrow" worker rights on top of a spate of wage and pension cuts enacted earlier this year.

Lawrence Lee, Al Jazeera's correspondent in Thessaloniki, said people on the street are livid.

"The mood here is absolutely febrile. Police aren't saying what entrance Papandreou will come into tonight to make his speech for fear he will be attacked by demonstrators," Lee said.

" People are very unhappy about cuts to public services and lack of jobs. The cuts are reducing the deficit but at what cost.

"The new concern is the extent to which Greece is able to grow its' economy. If people don't have any money they can't spend money in the shops. We suspect in his speech Papandreou will talk about ways to drive growth as well as [talking about] cuts."

Reforms 'on track'

Unions in Greece have promised to continue labour unrest into autumn after six general strikes already this year against the centre-left government's tough reforms, which were being adopted in return for the EU-IMF bailout loan.

The government has said that its target of reducing the budget deficit from 13.6 per cent of annual output in 2009 to 8.1 per cent this year is on track.

"We will continue as we started," Giorgos Papaconstantinou, the finance minister, said late on Friday.

However, he warned that "several more months must pass before we can convincingly show that what has been done was not a flash in the pan, and that we won't fall to pieces at the first sign of hardship."

On Friday the government announced plans to overhaul the state-run rail company, which has debts of $13.62bn, by cutting payroll and rail services.

About 40 per cent of its 6,300 workers would be let go and offered other public sector jobs, while the company faces private competition.

Parts of northern Greece have been hit the hardest by rising unemployment.

In the town of Naoussa, the jobless rate hit 50 per cent and factories have been relocated to nearby Bulgaria.

"We have no hope. At this point we have nothing," Ioanna Stoumbiari, an unemployed worker at a recently closed textile factory, said.

"Who will hire me at 50? I want to work, but who will hire me? They're not hiring younger kids, they're going to hire me?"